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Forex - USD/JPY higher despite Fitch warning

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Investing.com - " The U.S. dollar traded higher against the Japanese yen during Wednesday's session despite news that one of the major ratings agencies has warned about the U.S. inching closer to its first ever sovereign debt default.

In Asian trading Wednesday, USD/JPY rose 0.27% to 98.45. The pair was likely to find support at 96.57, the low from Oct. 7, and resistance at 98.72, the high from Oct. 1.

The yen has acted as a safe-haven alternative to the greenback as the U.S. government shutdown, the first there in 17 years, has stretched into a third week.

However, hopes continued to build on Tuesday that U.S. lawmakers and the White House are closer to agreeing on a spending packaged needed to reopen the government and avoid a default.

Some of that optimism was drained on news that talks between U.S .policymakers to reopen the government mired in its first shutdown in 17 years, had stalled.

The dollar was able to muster some strength against the yen, euro and British pound even after Fitch Ratings, the only of one of the three major credit ratings agencies that still has an AAA rating on the U.S., put U.S. Treasury bonds on Rating Watch Negative. That could be viewed as a sign Fitch is preparing to pare its rating on U.S. sovereign debt.

"The prolonged negotiations over raising the debt ceiling ... risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S. This `faith' is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other AAA" bonds," said Fitch in a statement.

Elsewhere, NZD/JPY climbed 0.45% to 82.58 after Statistics New Zealand said the country's CPI rose 0.9% in the third quarter following a second-quarter gain of 0.2%. The third-quarter reading was inline with analysts' estimates.

AUD/JPY rose 0.15% to 93.69.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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